Europe grows larger, and farther apart

ByArie Farnam, Special to The Christian Science MonitorDecember 10, 2002

HUMENE, SLOVAKIA
— It's a long way from this small eastern mountain town to London, Paris, or Berlin.

Unemployment here has swelled to about 40 percent, and the town's residents are weary after years of belt-tightening as formerly communist Slovakia has struggled to build a capitalist system.

"We have become a forgotten backwater, like a poor cousin tagging along behind Europe," says Pavel Riska, a carpenter who earns just $120 per month - $30 over the country's poverty line. "We like to think of ourselves as European, but we have very little in common with the rich people in Western Europe."

Yet at a summit in Copenhagen this week, the European Union will push the eastern borders of Europe all the way to Russia. Slovakia is set to become one of 10 new members of the European Union, the so-called "rich countries' club."

Many Slovaks see EU membership as a quick cure for the country's economic troubles, but analysts say they are in for a big disappointment. In fact, they may experience yet another wave of social displacement after joining the EU, because of financial disadvantages legislated for the new countries.

"The Slovak people have an overly rosy picture of what will happen after we join the EU," says Vladimir Bilcik, an economist at the Slovak Foreign Policy Association. "There is this myth that we will suddenly claim our rightful place as a rich country in the heart of Europe, but that will take years and expectations are bound to be disappointed."

In fact, things will probably get worse before they get better. "Food prices will increase by at least 20 percent, and that will cause some significant social fallout," says Martin Valentovic of the Slovak Center for Economic and Social Analysis MESA 10. "Salaries will rise eventually, but that will take much longer, perhaps 30 years, and foreign investors will only come to Slovakia if we offer cheap labor."

The EU's leaders often describe the expansion as a landmark, strategic unification that will spread peace and prosperity throughout the continent. But at least initially the new union will be economically lopsided, creating integration difficulties.

The current 15 member states will contain 95 percent of EU wealth, while all 10 new countries together will have just 5 percent. Moreover, the conditions laid down in accession agreements promise to exacerbate that inequality, at least in the short term. Many in both new and old states voice concern that the result will be a union sharply divided between rich and poor.

"It is taken for granted that we must join the EU, but it isn't going to be easy," says Fedor Gal, a prominent Slovak politician and leader of the pre-1989 anticommunist dissident movement. "People in Slovakia are very aware that the next few years will define where the line between the prosperous West and the poor East will be - and the big question is what side of that line Slovakia will be on."

At present, the accession states - including Slovakia's immediate neighbors the Czech Republic, Poland, and Hungary, plus three Baltic nations, a couple of Mediterranean islands, and the western Balkan enclave of Slovenia - occupy a gray zone between third-world destitution and first-world abundance.

The cities of Prague and Bratislava are bursting with flashy new cinemas, shopping malls, and cellphones, but the standard of living remains a small fraction of that of Western Europe or the United States. Upon close inspection, the clothes of the stylish teenagers turn out to be threadbare Chinese copies of name-brand labels, and most of the cellphones and cars are secondhand castoffs from rich countries. In pockets of grinding poverty, throngs of unemployed wait outside crumbling welfare offices. Much of the land lies polluted and fallow.

Central and Eastern Europeans often argue that they are poor only because their economies were monopolized by the Soviet Union for 40 years, when, in the words of Czech writer Milan Kundera, they were "kidnapped by the East."

Over the past decade, Slovakia and its neighbors have been forced to pay their own ransom by undergoing a painful transition back to Western economic and political systems. As a result, the average wage in Slovakia, Poland, or Latvia is about $300 per month, while the average German earns $2,400 and Britons bring in $2,750.

Fearing that this cluster of relatively poor new member states would prove expensive under the EU's principle of development solidarity, Brussels has effectively legislated a two-speed Europe after enlargement with conspicuous disparity between the rights and privileges of old and new members.

In terms of roads and infrastructure investment, current beneficiaries such as Greece and Portugal will receive twice as much EU funding per capita as the new member states. Under the current EU enlargement proposal, farmers in new countries will get just a quarter of the subsidies doled out in the old states. Moreover, the accession countries will be denied the EU's most basic right, the freedom of movement across internal borders, for up to seven years.

The European Commission argues that poorer states don't have the organizational ability to correctly fill out the complicated paperwork and utilize massive EU funding. Analysts within the EU also point out that, if new members demand the same rights as existing states, the whole enlargement project could be derailed. The last thing EU taxpayers want is some poor eastern cousin asking for extra helpings.

Support for EU membership varies widely in candidate countries, from 70 percent in Slovakia to 32 percent in Latvia, according to EU polls. Generally, the better prepared the country is, the more skeptical the public there. Analysts say the Slovak public is still keen to belong because Slovakia has not yet made the sacrifices that the Czech Republic or the Baltic countries have in opening their markets as part of EU expansion. The Balts have been asked to erect additional trade barriers against non-EU countries - a difficult move for tiny countries that rely so heavily on trade.

For the Poles, the most wrenching step toward EU entry was liberalizing land ownership rules to allow foreigners to buy land - which raises old fears of German domination. Poland also worries that the Western EU states will dump heavily subsidized agricultural and industrial products on its fragile market.

Once the candidate countries receive their EU invitations, the newcomers will decide through public referendum, or, most likely, by parliamentary vote, whether to accept.

EU officials and representatives of the candidate states continued to haggle yesterday over financial details, with four countries holding out for better terms than the EU's offer of $40 billion over three years.

Though many newcomers have reservations about membership, for Veronika Suniova, a young Slovak specialist in child psychology who speaks excellent English, the EU looks like a good bet. In Bratislava, she makes $150 per month, but she has been offered a job in London paying nine times that much. "When we join the EU, we will be the poor cousins in the European family, to be sure," she says, "but it is better to be a poor cousin than just plain poor and no cousin at all."

EU regulations, down to the size of an egg

NOVOSEDLY, CZECH REPUBLIC - A tantalizing aroma wafts from a bakery run by seven friends in this southern Bohemian village. Rows of fresh tarts and doughnuts cool in the front window. But up at the counter, co-owner Milan Ploc is fuming.

Under a new regulation handed down by the European Union, all those pastries will have to be wrapped in plastic. Mr. Ploc says that will seal off their aroma and quickly reduce them to rubbery inedibility.

With the Czech Republic hoping to reach a deal on EU membership this week, the country is scrambling to comply with myriad rules that have entrepreneurs and local officials alike spinning in confusion.

"I have nothing against the EU," Ploc says, "Most of their laws make good sense, but this thing about packing pastries in plastic is nonsense. But that is how it goes. If you want to join the EU, you have to accept their rules, no matter how stupid they may be."

The EU's 80,000 pages of regulations delve into such other minutiae as the correct size of an egg, the legal definition of a lease, the schedules of trains, and the preparation of Czech pickled sausage.

Ploc now uses baking temperatures set in Brussels, while a neighboring restaurant may no longer serve goulash on the second day, when Czechs believe the flavor fully develops.

The vision of a united Europe was not supposed to be about bickering over technical details. With the new regulations, the EU's larger aims are to bring order to the Byzantine legal systems of countries asking for membership, as well as to promote minority rights, environmental protection, fair-business practices, and freedom of movement across borders.

"These are all good ideals," says Jan Hanousek of the Center for Macroeconomic Research in Prague. "The problem is that accession countries are being forced to implement reams of new laws in a very short period of time, while Western countries had decades to develop all of this. The transition will cost [billions of dollars]."

Economists estimate that it will cost candidate states between 1.5 and 3 percent of their GDP each year to adapt to EU environmental norms alone, and another 2 percent to bring their dilapidated infrastructure up to standard.

The strain is exacerbated by what analysts term an "imbalance in implementation." Gunter Verheugen, the EU commissioner for enlargement, has said that in some areas, candidate countries now apply EU norms better than current members of the union: Poland has gone further in privatizing and fostering competition in the energy sector than France. And Hungary has privatized all of its banks, while Germany hasn't.

Yet, in other areas - such as environmental regulation of industry and the protection of minorities including the Romany in Central Europe and Russians in the Balts - accession countries still lag far behind the West.